Lady Bird Deeds

1. Lady Bird Deeds in Michigan

In Michigan, Lady Bird Deeds are not explicitly recognized under the state’s statutory law, but they are permissible under the common law. The use of these deeds is based on case law and legal precedent, particularly regarding life estate deeds and the ability of the grantor to retain control of the property during their lifetime.

a. Statutory Framework for Life Estate Deeds in Michigan

While Michigan law does not explicitly provide for Lady Bird Deeds, the state does have a framework for life estate deeds, which share similar characteristics with Lady Bird Deeds. Under Michigan’s Property Code, specifically MCL 554.91, a life estate deed creates a life estate interest in property, where the grantor retains the right to use, control, and enjoy the property during their lifetime. Upon the death of the grantor, the property typically passes to a remainderman or beneficiary.

However, a key difference between a traditional life estate and a Lady Bird Deed is the degree of control retained by the grantor. In a traditional life estate deed, the grantor’s interest is restricted, and they cannot sell or encumber the property without the consent of the remainderman. In contrast, the Lady Bird Deed allows the grantor to retain full control of the property, including the ability to change beneficiaries or sell the property, without the need for approval from the remaindermen.

b. Case Law Supporting Lady Bird Deeds in Michigan

While Michigan has not enacted a statute specifically recognizing Lady Bird Deeds, Michigan courts have upheld the validity of deeds that transfer property to beneficiaries with certain conditions. In Hendershott v. Hendershott, 467 Mich. 12 (2002), the Michigan Supreme Court recognized the validity of a life estate deed that allowed the property owner to retain control during their lifetime, provided that the deed language clearly conveyed the intent of the parties.

Case law, while not specific to Lady Bird Deeds, supports the broader concept of allowing a grantor to retain control of the property even after conveying a future interest to the beneficiaries. Courts have generally allowed property owners to retain control over real property through deed language that preserves the owner's rights during their lifetime, setting a precedent for the use of Lady Bird Deeds.

c. Benefits of Lady Bird Deeds in Michigan

The benefits of a Lady Bird Deed in Michigan include:

• Avoidance of Probate: Property passed through a Lady Bird Deed avoids probate, which can be a lengthy and costly process.
• Control During Life: The grantor retains full control over the property during their lifetime, including the ability to sell, mortgage, or change beneficiaries.
• Medicaid Planning: A Lady Bird Deed can be used as part of Medicaid planning, allowing the grantor to transfer property to heirs while still qualifying for Medicaid assistance.

2. Lady Bird Deeds in Ohio

Ohio, like Michigan, does not explicitly recognize Lady Bird Deeds under its statutory law, but it does allow for life estate deeds with certain provisions that can function similarly to a Lady Bird Deed. The main distinction in Ohio is that Lady Bird Deeds are often executed using a “Transfer on Death” (TOD) designation, which provides similar benefits to those of a Lady Bird Deed.

a. Statutory Framework for Life Estate Deeds and Transfer on Death Deeds in Ohio

Ohio law recognizes both life estate deeds and Transfer on Death Deeds (TODDs), which can function similarly to a Lady Bird Deed. Ohio Revised Code Section 5302.22 allows a property owner to execute a Transfer on Death Deed, which transfers ownership of real estate to a beneficiary upon the owner’s death, avoiding probate. Like a Lady Bird Deed, a TODD allows the grantor to retain full control over the property during their lifetime, including the right to sell, mortgage, or change beneficiaries.

The key difference between a TODD and a Lady Bird Deed is that TODDs are specifically authorized and regulated by Ohio law, while Lady Bird Deeds are a more informal and flexible type of life estate deed.

b. Case Law and Legal Precedents in Ohio

Ohio courts have upheld the validity of life estate deeds and Transfer on Death Deeds, including those that allow the grantor to retain control over the property. In Estate of Ferrin v. Ferrin, 142 Ohio St. 3d 56 (2015), the Ohio Supreme Court held that a Transfer on Death Deed executed under Ohio Revised Code Section 5302.22 is valid and effective, passing ownership of property to the designated beneficiary without the need for probate.

Though the case law in Ohio does not directly address Lady Bird Deeds, it provides a framework for understanding how similar types of deeds, such as Transfer on Death Deeds, can be used for estate planning purposes. These deeds allow property owners to transfer ownership without triggering probate while maintaining control during their lifetimes, much like Lady Bird Deeds.

c. Benefits of Lady Bird Deeds (or TODDs) in Ohio

• Avoidance of Probate: Property transferred through a TODD, like a Lady Bird Deed, bypasses the probate process.
• Full Control During Lifetime: The property owner retains full control of the property during their lifetime, including the ability to change beneficiaries or sell the property.
• Medicaid Planning: While a Lady Bird Deed might be used for Medicaid planning, in Ohio, a Transfer on Death Deed can also be used to transfer property without affecting Medicaid eligibility, making it an effective estate planning tool for those considering long-term care needs.

3. Key Differences Between Lady Bird Deeds in Michigan and Ohio

Although both Michigan and Ohio allow for property transfers that avoid probate while retaining control during the grantor's lifetime, there are key differences between the states:

• Explicit Statutory Authorization: Ohio has specific statutory authorization for Transfer on Death Deeds under ORC 5302.22, whereas Michigan does not have specific legislation for Lady Bird Deeds, relying instead on common law principles related to life estate deeds.
• Flexibility: Michigan courts have upheld life estate deeds that function similarly to Lady Bird Deeds, but Ohio’s Transfer on Death Deeds are more formally regulated and provide a clear statutory framework for their use.
• Medicaid Planning: In both states, these types of deeds can be used as part of Medicaid planning to preserve eligibility for Medicaid while transferring property to heirs.

4. Conclusion

Lady Bird Deeds are a valuable tool for estate planning, providing the benefits of avoiding probate, maintaining control of property during the owner’s lifetime, and facilitating Medicaid planning. While Michigan does not have specific statutes recognizing Lady Bird Deeds, the state’s common law regarding life estate deeds supports their use. Ohio, on the other hand, has formalized a similar tool in the form of Transfer on Death Deeds, providing clear statutory guidance for property owners seeking to transfer property while avoiding probate.

Whether you are in Michigan or Ohio, these types of deeds can help streamline the transfer of real estate while offering important protections for property owners. However, it is important to consult with a qualified attorney to ensure that the deed is properly executed and aligns with your overall estate planning goals.

Works Cited

1. Michigan Compiled Laws. "MCL 554.91 – Life Estate Deeds." Michigan Legislature, 2024, https://www.legislature.mi.gov.
2. Ohio Revised Code. "ORC 5302.22 – Transfer on Death Deeds." Ohio Laws, 2024, https://codes.ohio.gov.
3. Hendershott v. Hendershott, 467 Mich. 12 (2002).
4. Estate of Ferrin v. Ferrin, 142 Ohio St. 3d 56 (2015).